Commons and the Market

Discussion

Lukas Peters:

"Having discussed the relationship between commons and the state, let us now turn to a central question that has been touched upon repeatedly yet incompletely so far: the relationship between commons and the market.

Since I have already discussed both justifications of the open and competitive market and some of the problems it engenders, let me be brief in recapitulating the arguments. Most importantly, the open and competitive market has been justified as a way to bring peace and unleash productivity. It has been assumed that wealth is generated through the protection of individual negative rights in private property and through the selfregulation of supply and demand on the market. Yet, while this negative freedom has increased the freedom of individuals with direct access to property in external resources, other individuals have become increasingly dependent on hierarchical wage labor relationships to secure their existence. Furthermore, the competitive dynamic of the open market forces firms to perpetually grow in order to survive. This requires that ever more resources are extracted and appropriated from the store of common goods that other people depend on, ultimately reproducing the original discrepancy between haves and the have-nots and increasing the deterioration of peoples’ socio-ecological habitats. As we have seen, the priority of individual negative rights and the self-regulation of the market also undermine and severely limit people’s abilities and opportunities to collectively solve these problems and to democratically co-create and codetermine their shared living conditions.

Therefore, the questions that we face now are,

• firstly, whether these problems are a result of the market per se or of the specific social arrangements of the open and competitive market.

• Secondly, we must ask how the concept of commons can provide us with insights that enable us to transform our understanding and organization of markets. To answer these questions, I will begin by analyzing the role of the market in commons literature. After this, I will discuss the relationship between commons and the market from a historical perspective.

In a third step, I will develop the notion of a market commons that will, hopefully, provide us with an alternative and democratic concept of economic relationships."

(https://www.transcript-verlag.de/shopMedia/openaccess/pdf/oa9783839454244.pdf)

See also: The Concept of the Market in Commons Literature

The question of the role of markets in both pre-capitalist societies and a future commons-creating society

Lukas Peters:

"Let us ... analyze this historical development not from a commons but, rather, from a market perspective. Generally, the creation of an abstract, competitive market was not only possible due to the enclosure of commons, but also through the opening up of highly regulated local markets. Karl Polanyi and Fernand Braudel are right to argue that, although most of human history has been based on subsistence and gift economies, exchange, trade and certain types of local markets are not necessarily a new phenomenon (Polanyi 2001: 66; Polanyi et al. 1957: 257-70; Braudel 1986: 32-5, 41). Nevertheless, we should not equate all forms of money and markets with an open and competitive market economy that is structured according to a self-regulating “supply-demand-price mechanism” (Polanyi1977, 124). As both authors demonstrate, local markets simply bring production and consumption together and enable the acquisition of “goods that are not available on the spot” (Polanyi et al. 1957: 257, Braudel 1986: 42). To be more precise, the local market is a place that enables people to exchange goods that they do not produce themselves either through barter or with money. For most of human history, the exchange of goods was socially embedded and highly regulated by customs and social institutions.

One such example of an exchange-based market is the guild system that developed during the process of urbanization in western Europe between 900 and 1300 CE (Schulz 2010). In her highly insightful article “The Silent Revolution: A New Perspective on the Emergence of Commons, Guilds, and Other Forms of Corporate Collective Action in Western Europe” (2008), Tine De Moor argues that in the Netherlands the development of guilds on the one hand and commons on the other exhibited similar institutional forms of regulation of common resources through collective action. De Moor understands commons as highly regulated natural and agricultural resources such as water, pastures and forests (i.e. common-pool resources). In contrast, craft guilds are urban institutions that regulate common resources such as labor, skills, technology, prices, information and, ultimately, the market itself. With reference to Dutch historians Lourens and Lucassen, she generally defines craft guilds as organizations that – with the agreement of the local authority – unite members of the same occupational group, with as their most important goal the furthering of their economic interests, but not without taking into account the general wellbeing of their group as well. (Lourens/Lucassen in De Moor 2008: 187)

Although de Moor admits that it is difficult to prove whether guilds always fulfilled this function, the principles she locates in guild practices nevertheless fit into our understanding of relational and interdependent freedom in which the thriving of the individual depends on the flourishing of the community – and vice versa.

According to De Moor, despite the differences, the goals and regulative mechanisms of guilds were rather similar to those of commons: To make their collective projects work, guilds and commons relied heavily for enforcement mechanisms on group norms, as opposed to formal legal enactments. They designed most of the rules themselves, with or without the involvement of the local powers […]. With a large set of rules, commoners and guild members tried to regulate the behaviour of their fellows – to prevent them from free riding – and to control the effect their surroundings could have on the behaviour of the members. They developed a system of market regulation in order to protect their ‘own little world’. Measures were taken by both guilds and commons to achieve a reasonable income for their members and to eliminate the disruptive effects of the market, which was still at an early stage of development when commons and guilds were set up in Europe. Institutions such as guilds could make functioning within those settings less risky, though without losing too many of the advantages the market offered. (De Moor 2008: 197)

These similarities between guilds and commons are noteworthy because they provide us with an historical example of social organization that utilized the market for the exchange of goods in order to satisfy basic needs. Here, the market was not regulated ‘from without’ by the state, but rather by the producers themselves to protect them from the negative dynamics of free riding and competition such as poaching, hoarding and price and income instability. At the same time, collective action aimed at generating positive effects through pooling resources in order to share risks and create advantages of scale (De Moor 2008: 202-5).

If we understand a commons, in the general sense, as a resource system that is democratically self-governed by those significantly affected by it, we could also define medieval guilds as a type of labor commons.

Parallel to fisheries in which the individual fishermen own their own boats and equipment, the craftspeople in the guilds also own their own workshops, yet share and regulate the specific knowledge, technologies and skills of a specific craft. Although this skilled labor is used to produce things that are sold on the market, it could nevertheless be argued that a guild limits the commodification of labor power through its self-defined rules and regulations.

Aside from the regulation of labor within the market, however, we can also understand pre-capitalist markets themselves as second-order commons institutions.

In contrast to the concept of a labor commons, the notion of a market commons appears to be – at least at first glance – inherently contradictory. The reason for this seeming paradox lies in our contemporary and rather narrow interpretation of markets as institutions structured according to competition, commodities and profits while commons are based on cooperation, concrete goods and use-values. Furthermore, a market is often understood as institutionally open (North et al. 2009), while the goods that are exchanged must be private and closed (Demsetz 1967).

According to some academics, however, an open-access market can also be interpreted as a commons (Carroll et al. 1979) or, more precisely, as an Hardinian unregulated and open-access commons. Although the members of guilds do produce private goods that are exchanged on the market, the pre-capitalist market itself is more or less closed. Sellers and prices were generally defined in advance by the guilds to protect producers from competition and the ‘tragedy of the market’. Through their self-defined rules and regulations guilds created a type of “embedded market” (Polanyi) or “moral economy” (Thompson 2010) that was organized according to the satisfaction of needs instead of a self-regulating price mechanism and profit maximization. In this sense, and depending on its institutional framework, I would argue that a market could theoretically be defined as a democratically selfregulated commons. Yet, despite this similarity, I would argue that medieval markets regulated by guilds should not be understood as commons because they did not include a large group of people who were significantly affected by this resource system and its institutional regulation: the consumers. This was the reason for Adam Smith’s critique of guilds; they did not act in favor of consumers. Yet, while Smith advocated the deregulation of markets in the name of lower prices for customers, I argue in favor of the integration of consumers in the democratic regulation of markets. We shall return to this problem later, but first we must understand how regulated medieval markets were transformed into open-access, capitalist markets. With historian Fernand Braudel, I would argue that in Europe, parallel to the enclosure movements that privatized common pool resources, medieval markets, which up until the 15th century were quite closed, at that point began to be gradually opened. This transformation occurred, most importantly, through private or “counter-markets” for foreign goods, which existed outside of local medieval markets. Here, individual traders became middlemen between producers and consumers outside of the traditional, collectively regulated circuits of exchange. Both the access to mobile capital and the superior knowledge of both ends of the exchange relationship gave the merchant an unequal, quasi-monopoly position in trade and enabled him to accumulate large profits (Braudel 1986: 50-53). The ‘privatization’ of local markets was in turn supported by state colonialism and its foreign trade relationships. Furthermore, both Braudel and Polanyi show that the mercantilist nation state also opened local markets, ultimately creating a protected yet internally open domestic market (ibid.: 88, 97; Polanyi 2001: 63-70). Due to growing criticism of this state intervention in economic matters articulated by people such as Adam Smith, the state slowly withdrew and relaxed its protectionist measures, gradually and carefully transforming the internal open market into a more open international market regime (Chang 2002; Shaikh 2007). Over time, the socially embedded and collectively regulated local markets of the guild economy were transformed into one open, ‘common’ capitalist market.

With this very simple sketch of the development of markets in recent history, I hope to have shown that we must speak of markets in a differentiated manner.

Furthermore, I hope that I have shown that markets often were and, thus, can be collectively regulated in order to serve social needs and desires. The importance of this short excursion in the history of markets for my argument is that we can, or rather should, integrate these insights into our understanding of a possible commons-creating society. So let us now turn to the concept of a market commons."

(https://www.transcript-verlag.de/shopMedia/openaccess/pdf/oa9783839454244.pdf)

Source

* Book: Lukas Peter. Democracy, Markets and the Commons: Towards a Reconciliation of Freedom and Ecology. Transcript, 2021

URL = https://www.transcript-verlag.de/shopMedia/openaccess/pdf/oa9783839454244.pdf

Originally, "a dissertation by the Faculty of Arts and Social Sciences at the University of Zurich in the fall semester 2017"